Fintan Flannelly, Sales and Off-Plan Manager at Exclusive Links Real Estate Brokers, takes a look at the changes in demand for off-plan and ready-built properties and shares his views on where the market is heading next.
The Dubai property market is ever changing and has evolved quite a bit since I relocated here in 2015. There have been shifts in demand within the market as the range of property options for buyers has increased and opened them up to possibilities which were not previously available. This evolution is something I believe will carry on as Dubai continues to grow and expand.
Unlike many other mature property markets across the world, Dubai has the benefit of still having untouched areas which can be developed into. This combined with a great vision for the future, means that the possibilities held in these areas in Dubai and the rest of the UAE can actually become a reality.
If we take a look back to 2016, there was a shift in buying habits as where traditionally ready-built properties were always the most popular with clients, there was an increase in interest in off-plan options. Ready-built properties were only available in certain areas or established communities and they generally carried a higher price, meaning they were outside of the price range for many potential buyers.
At this time, more off-plan properties started to become available on the market. They did not always have the most favourable payment plans, as many of them were loaded during the construction period with a balance on handover. But as more developers began entering the market with new builds which were modern, contemporary, high quality and often low-rise, these developers started to raise the benchmark for off-plan properties. The new off-plan developments were not in traditional areas in Dubai, instead moving a little further out and creating new communities. This increase in supply on the market led to more affordable property options with better payment plans for buyers.
This movement outside of the established, traditional locations in Dubai was the start of a shift in mindset, I believe, as many residents often felt that areas outside of the traditional would be too far. However, many potential buyers who did not want to purchase in high-density areas were now being given the option to move out to lower density areas which offered more facilities like parks in gated communities.
The increase in popularity and purchasing of off-plan property meant that those wanting to sell their ready-built properties, as they wanted to move on or upsize, had to be more competitive. The only real benefit that ready-built had over most off-plan options was that they were in prime locations, so the only way they could really compete with off-plan sales on price.
One of the main attractions of off-plan properties, at this time, was that by the time they were handed over you would benefit from capital appreciation. However, there was a change in market conditions in 2017-2018 which meant that this was not always the case. This change in the market made a way for ready-built property sales to make a comeback. It also meant that developers of off-plan options had to start becoming more creative with their payment plans.
The constant battle between off-plan and ready-built property sales has continued into 2019, as developers are now offering even better payment plans to try and win over potential buyers. One of the main selling points of off-plan properties is the ability to sit down and take a look at floor plans to be able to select the specific unit that you want and be able to judge it on its merits before making a decision. Some clients really like this aspect as it provides the ability to make the property what you want it to be when fitting it out.
This may suit some, but other buyers much prefer a ready-built property as they have the distinct advantage of being able to view each property exactly as it is right now. So you know exactly what you are getting before committing – which is not always the case with off-plan as things can change during construction.
Regardless of the pros and cons associated with both property types, with prices at current levels in the market and the various options available for buyers, there has never been a better time to purchase in Dubai.
We often hear only of the argument around off-plan vs ready-built, with off-plan coming from the developer and ready-built from the secondary market. However, recently I have noticed the emergence and growth of a third segment – that of new ready-built properties being offered by developers. These are the properties that developers have produced but did not sell off-plan in 2017/18 due to market demand.
This new section will satisfy a lot of potential buyers who may not want to purchase in the secondary market. Many of these properties are finished to a high specification and located in new, upcoming communities. In some ways, it should be easier for potential buyers to commit to purchasing these places as they are able to view the end product, rather than being expected to commit to large financial decision having seen only brochures and 2D floor plans. Instead, now they are able to physically step into the new build as they would any ready-built property.
The only thing I always advise my clients when considering buying in this third segment is that the units which are available ready from a developer are, in some cases, the units which other buyers, who purchased off-plan, did not want. It is worth considering why they were not purchased and whether the property really does meet your requirements and if it is the right option for you.
I view this third segment as a positive addition to the standard off-plan and ready-built options available on the market. As with both of the traditional options, this third segment has its pros and cons, and will appeal to some buyers more than others depending on their circumstances. The property industry in the UAE is a dynamic one, with new opportunities coming onto the market relatively regularly, all of which are aiming to meet the needs of different clients.
I am often asked by potential clients what the best option is, whether to buy off-plan or ready-built. My advice always remains the same, the option you go is fully dependent on your situation. When speaking to your real estate agent it is worth being open about your long-term plans so they can really advise you on what the best options are for you.
By Fintan Flannelly, Sales and Off-Plan Manager at Exclusive Links Real Estate Brokers